The U.S. trade deficit in goods fell 8.3% to $94.3 billion in August, according to the Commerce Department’s advance estimate announced Friday. In July, it reached its highest level in more than two years. There hasn’t been such a small trade gap since March.
According to a study by Econoday, economists thought the deficit would go down from $102.7 billion last month to $100 billion this month.
Important facts: The imbalance got smaller because exports went up and imports went down.
It went up by $4.1 billion, or 2.4%, to $177 billion in August.
Goods brought in dropped by $4.5 billion, or 1.6%, to $271.3 billion.
Stocks at wholesalers went up 0.2% in August, following a 0.3% rise the previous month. Stocks in stores went up 0.5%, following a 0.8% rise in July. Retail stocks that aren’t cars went up 0.4% after going up 0.5%.
In the big picture, net trade may not have a big effect on GDP growth in the third quarter after slowing growth in the first two quarters of the year.
Oliver Allen, a senior U.S. economist at Pantheon Macroeconomics, said that when the goods trade imbalance unexpectedly went down, it was because of a drop in imports of food and industrial supplies, such as oil.
Darcy thinks that trade may only take away 0.2 percentage points from growth in the quarter from July to September.
Allen said that the U.S. GDP for Q3 “just north of 2% seems like a reasonable base case.”
In the future: “Rising inventories always make us nervous because they mean we might have to cut back on production.” Keep an eye on us. Carl Weinberg, head economist at High Frequency Economics, said, “A rise in inventories does help GDP growth, though.”
